Press Releases: 2015
2014 Results & CEO Letter
AJAX: March 5, 2015:
Automodular Corporation (“Automodular”) reports fourth quarter net earnings of $6.3 million or $0.32 per share compared to net earnings of $3.5 million or $0.18 per share in the same period of 2013. Earnings for the year ended December 31, 2014 totaled $14.8 million or $0.76 per share compared to 2013 net earnings of $10.4 million or $0.52 per share.
Automodular Corporation shipped its final modules to Ford’s Oakville Assembly Plant on December 23, 2014. Over the nineteen-month period between Ford’s announcement that it was insourcing its business to the production of our final module, we had approximately 40% of the workforce leave the Company for other jobs. Despite these difficult circumstances, Automodular continued to operate on a “business as usual” basis. We put in place incentive and retention programs for our employees to encourage steady attendance and focus on continuing to provide a defect-free module to our customer on time, every time. As a result of the hard work and determination of the entire workforce, the Company generated outstanding financial results for its shareholders while maintaining excellent health and safety and quality records.
Our focus in the first quarter of 2015 has been on preparing our Oakville facilities to be turned back to the respective landlords. At the beginning of January, Automodular’s staff complement was approximately 30 people with the majority focused on the facility work in Oakville. The facilities were turned over at the end of February. At the time of this release, the Company has fewer than 15 employees and by the end of March we expect our staff complement to be reduced to fewer than 10 people.
Automodular continues its efforts on the diversification front. We continue to reach out to our contacts and work with our Canadian-based investment banker to assist us in identifying opportunities to leverage our core skills. The process has been a challenging one. We have seen some opportunities that appear to be a good fit, but pricing has been an issue. When pricing multiples are higher, it becomes difficult to rationalize an appropriate return to our shareholders going forward. We have proceeded to the due diligence stage with respect to certain opportunities but in the end issues have arisen that caused us to conclude that a transaction was not in the best interests of our shareholders. We will not enter into a transaction for the sake of merely continuing the Company.
Automodular’s Board of Directors and its executive management team remain focused on finding the right opportunity to leverage our skillsets and further enhance shareholder value. We still believe that our lean manufacturing and project management skills are very valuable. At the present time, Automodular is undertaking an in depth review of an Ontario- based private manufacturing company. There can be no assurance that this or any other transaction will be consummated. If we are not successful in finding the right fit in a timely fashion, we will consider all options available to us including potentially winding down the Company. Automodular will communicate with its stakeholders when it has something material to share.
With respect to organic opportunities, Automodular has no automotive quotes currently outstanding. Discussions have been held with two significant wind manufacturers regarding opportunities in Quebec and Ontario. Unfortunately the sourcing and sales lead times in the renewable industry can be extremely long. As previously noted, we do not believe that the opportunities in the wind sector are substantial enough to rationalize a public company structure in and of themselves.
In the fourth quarter of 2014, the Board of Directors elected not to pay out a regular quarterly dividend. The decision was made in order to preserve capital for opportunities that were under consideration at that time. For the same reason, we will not be paying out a regular quarterly dividend in the first quarter of 2015.
Automodular’s audited consolidated financial statements, management discussion and analysis and annual information form for the year ended December 31, 2014 will be filed on SEDAR on or about March 11, 2015 and the complete annual report together with the management information circular and notice of meeting will be mailed to shareholders on or about April 15, 2015.
U.S. SHAREHOLDER INFORMATION UPDATE
Based on the results of its analysis, Automodular has concluded, for the year ended December 31, 2014, that it meets the definition of a Passive Foreign Investment Corporation (“PFIC”) as defined in the Internal Revenue Code. The U.S. tax laws regarding PFICs are extremely complex and shareholders are advised to consult their own tax advisors concerning the overall tax consequences of their respective investment in, and ownership of, shares of Automodular under United States federal, state, local and foreign law. It is Automodular’s intention to prepare and make available to U.S. shareholders a PFIC Annual Information Statement in order to allow U.S. shareholders to make certain tax elections. We expect that the information will be available on or about March 31, 2015 and that the information will be filed on SEDAR and posted on our website at www.automodular.com
For further information, contact:
President and CEO
(905) 619 4202
This press release contains forward-looking statements that involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are market and general economic conditions and the risk factors detailed from time to time in the Company’s periodic reports filed with the Canadian securities regulatory authorities and on SEDAR at www.sedar.com. Readers are cautioned not to rely on forward-looking statements. Except as required under continuous disclosure obligations, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Automodular does not provide financial outlooks.